Skip to main content

tv   Squawk on the Street  CNBC  August 25, 2009 9:00am-11:00am EDT

9:00 am
lead to enormous pain. that's whyness some resistance on wall street who would prefer to keep things the way they are. we will pass the reforms necessary to protect consumers, investors and the entire financial system. we will continue to maintain a strong and independent ferch. we will also keep working towards the reform of a health insurance systems whose comforts and discriminatory practices are bankruptcying our family, businesses and government. we will continue to build a clean energy economy that creates the jobs of the future within our borders and give our children and workers the skills and training they need to compete for these jobs in the 21st century. much like the decisions we've made so far, the steps we take to build this new foundation will not be easy. change never is. as ben and i both know, it comes with debate and disagreement and resistance from those who prefer the status quo and that's all
9:01 am
right. because that's how democracy is supposed to work. but no matter how difficult change is, when he pursue it relentlessly because it is absolutely necessary to lift this country up and create an economy that leads to good jobs, broad growth. so i want to congrat late ben on the hard work he's done so far. and wish him continued success. thank you so much. >> thank you, mr. president. i would lake to express my gratitude to president obama for the confidence he's shown in me for his nomination and wavering support for a strong federal reserve. it's been a particular privilege for me to serve with colleagues throughout the federal reserve system. they've demonstrated remarkable resourcefulness, dedication and stamina under trying conditions.
9:02 am
to the long nights and weekends and the time away from their families, they have never lost sight of their critical importance of the work of the fed feds for the economic well being of all americans. i am deeply grateful for their efforts. i especially want to marchg my own family, my wife anna and our children joel and alice is. without their support and sacrifice, i could not undertake this task. the federal reserve like other economic policy makers has been challenged by the unprecedented events of the past few years. we have been bold or deliberate as circumstances demanded but our objective remains constant to restore a more stable and financial economic environment in which opportunity can again flourish and americans' hard work and creativity can receive their proper rewards. mr. president, i commit today to you and the american people that if confirmed by the gnat, i will
9:03 am
work to the utmost of my abilities, with my colleagues at the federal reserve and alongside the congress and the ed a strags to help provide a solid fou foundation for growth and prosperity in an environment of price stability. thank you, sir. >> thank you. great job. >> thank you. >> breaking news. at the crossroads of washington and wall street, president obama officially renominating the federal reserve chairman ben bernanke to a second four-year term. the president commending bernanke for, in his words, bold action and outside the box thinking that has helped put the brakes on our economic freefall. >> quick quickly, just to get the headlines in, we were waiting for at 9:00. case-shiller home price numbers just coming out with a drop of 1 15.1% for june from june a year ago. we have bob schiller with us as well as david blitzer with us to
9:04 am
talk about those numbers in just a moment. >> number, futures have been rally, up 820 right now. what you see is what you get, worth about 60 on the dow. >> let's bring in our bernanke task force. john harwood and senior economic reporters steve liesmease phone. good to have everybody with us. what do you say rich, rich? i know there was an 80% chance that some sort of futures market that trades these sort of things that he would be renominated. was it the right thing? >> it has to be the right thing. there was really no other choice. you can't disrupt things politically in the middle of a situation that's still extremely tender and raw, certainly the employment situation, the global markets, there are a lot of issues to still be played out here and the most participant thing to remember is you don't change the general in the middle
9:05 am
of the war or in the middle of the battle. it's still going on, there's great unwinding that we have to deal with and eventually, maybe three -- another four years, you could replace him, but right now, he's the guy in charge, he's the guy taking us to the next level and that's going to calm the markets which is basically the thing that you have to do in this environment. >> first of all, i want to point out that there was another choice. it's not like he didn't have another choice. he could have named jim cramer. >> that would have been -- not as calming though. >> i hear it was run-off last night. >> i would have named cramer. but anyway, let's get to john harwood. it has to be confirmed again. has to go through the confirmation process again s there going to be any heat in that process given what we've been through? >> i think only minor heat, mark. he'll get some questions from the left about the failure to
9:06 am
prevent the bubbles in the first place and whatever culpability that liberals ascribe to the bernanke fed problems that we developed and some on the right for overreach but i don't think there's any question whatsoever that he's going to be confirmed. you heard him trying to balance those political forces at the very end of his statement, talked about his commitment to returning the economy to growth with price stability. both of those are very important to the future of the economy and barack obama and his political prospects over the next few years. >> steve liesman, what your thoughts? >> it just begins now. i think john is right. it will be an easy con firl air, but i think it will be the jumping off point for a do bait about fed policy in the past, fed policy of the present and fed policy of the future. i think there are a lot of points of criticism and contention and i think it's also a jumping off point for thinking about fiscal deficit, the size of those deficits and what needs
9:07 am
to be done about them. this is just one of several political issues facing the fed. there is regulatory reform, this issue with the consumer financial protection agency there. is the exit strategy, can you imagine what is going to happen when the federal reserve starts selling mortgage backed securities, what the buildings and retailers of this country will say? so with this political decision it is hoped by many central bankers right now that they begin a process of the federal reserve extricateding itself in the political process. >> do you think he had had any reservation, ben bernanke, about taking this? >> i don't. i think he wanted to see this job through. he started this in terms of the fed's extraordinary action. i don't think he wanted to be the guy who to leave before he took the fed out of it. that's what is going to be primarily on his mind is the exquisitely dangerous timing of removing the fed and its accommoda
9:08 am
accommodative policy and getting it back towards a more situation of monetary policy. >> richard, is it time to kick in the exit strategy or should we wait a while? >> we wait a while. he's outlined plan. he hasn't said when. that's another reason you're seeing him a little standoffish before he tells you he's kicking in these policies. but remember, you couldn't throw a political figure into this already challenging situation. we're down the path already. now comes the end game, or presumably the end game of unwinding. that's a football, you certainly don't want to pass on to a newby. a fed newby or someone who hasn't been in the battle. that's why you don't change the general when you're in the middle of the battle. >> john harwood? >> i think that's a good point and that's where the administration came down. but i do think that rich is right, as long as the unemployment right in particular is rising, you're not going to see that extra indication begin
9:09 am
just now. >> all right, john harwood. and our senior economics reporter steve liesman, thank you off. they obviously coordinated their apparel last either. they were both in the navy -- i'm sure khakis on and white shirts. >> i think that's a uniform on martha's vineyard. >> that's what it appeared. the only difference we noticed is that the president had on a flag pin and chief did not. >> he didn't? >> no, he did not. >> what should we read into that? let's convene a panel. >> why did ben bernanke not have a flag pin on? >> yeah. there could be some deep meaning in there. why are we not moving on? >> are we ready? we're ready. after the case-shiller latest report are about home prices. >> we were told that -- oh, they have to -- >> we let our viewers know exactly was going on here every second. home prices are in an upswing in the second quarter of the year,
9:10 am
depends how you look at it, but there are promising aspects to these headlines. here to dissect the data. this is a very special day. it is here. bob schiller, creator of the case-shiller index. >> who knew there reallies were a bob schiller until now? >> nobody knew. >> it could have been like smucker's, there's no mr. schmumucker's. >> here he is and david blitzer, managing director and chairman of the s&p 500 index committee. before this segment came on, we were talking about how to break down these numbers. year on year double digit decline, but month on month some improvement. some people are critical of that but does that tell the story sometimes? >> yeah. you can't focus on year over year because some of that is 12 months ago. it is an impressive turnaround. this is a huge sudden upward swing. i think it might represent a change in trend.
9:11 am
the only doubts about it are that the market is rather abnormal with all these foreclosure sales, but is it certainly the outlook is 1er7b8 changed with this data. >> we already talk about this, you take out the foreclosure, i'm not saying you should or shouldn't, but if you take them out, what does the market look like? >> we don't have detailed data on what the market looked like. clearly the foreclosure sales tend to be in mid price homes and below and everybody believes and i think accurately so that a house in foreclosure tends to sell for less than otherwise identical house if there such a thing. but these sales are part of the market. i don't think they should be taken out. some of the same house that pushed things up on the way up. so in some sense, they ought to be in. when you ask about the month to month, we do publish seasonally
9:12 am
adjusted data as well as the data that's used by the futures exchanges and securities and if you look at that data, that confirms the good news. in fact, in some sense, that data last month to this month's report is even more dramatic than the headline data. >> is this more important than the report from if it's ratings, which i don't know whether you're aware of, that says that the curate on bad mortgages has plummeted? their word is collapsed. and foreclosures because of this are likely to remain a big problem. barkley's capital says you won't see the peak until the middle of next year. what should i be listening to, you or them? >> i read that story, too. that was very impressive reasons to worry. i didn't say that we've reached the bottom. i said this is very suggestive of a major turning point, but we've seen other corrections like this that will revert.
9:13 am
notably, a year ago in early 2008, we saw the rate of decline of home prices suddenly get much smaller. and it looked good. but then it collapsed again. we really don't know the future. that's why we needs markets to help us predict. and we have a securities market that is still not predicting. our umm, which is traded on the new york stock exchange, it's still not predicting any major increases going out five years. it's predicting now that in five years, home prices will be 6% hi higher than they are now. that is not a huge recovery. >> but nowhere near where we were. >> i thought we need economists rather than markets. >> we're free market economists. >> david blitzer, what's your response? this if it's report is very zbloomy. >> i think it is gloomy. on the other hand, i think it's an issue or problem that has been growi steadily.
9:14 am
there have been reports over the last month or association that a lot of banks would rather not renegotiate mortgage, they would rather try and pocket the large penalty fees. and the way that a lot of these are structured, when you include the fee, the incentive is not there for the bank to settle. but the other thing to look at when you mention is this really the turning point. go way, way back to 1981, '82 where the fed drove interest rates up, down and back up. and housing starts and housing activity gave exactly the mirror image. and when the feds rolled rates back up after a very short rebound in the second half of 1980, housing plummeted. so as you look about the exit strategy, what will ben bernanke do over the next 6, 12, 18 months, that's a huge question. if the exit strategy starts to exit too soon, unfortunately, all bets may be off. >> bob, let me just ask you, you said something that stuck out to me, which is that in five year,
9:15 am
will be 6% higher than we are now in home prices, but according to the latest data, home prices from their peak are down 30%. so in that world, i don't know how long it takes for home prices to get back, if ever. what does that mean for recovery? homes only up 6% from these levels in five years, how do you have an economic recovery? >> that was yesterday's close. i think that this market is going to adjust with new information. >> so you think it will be up more than 6. but even association say it's up 10 or 15, i mean -- >> we're still way below. >> there's still a lot of worry, this foreclosure problem, there's a lot of problems out there. there's a real possibility that we are going to see some bad news and it's going to be a reversal again. but if you just look at the data it is a wow turnaround. >> you're not real good at this good news things, are you, bob?
9:16 am
>> he's happy but -- >> you're holding it out there, well, you know, these numbers, dramatic -- i'm reaching for the punch, but all of a sudden, of course it could all go to hell soon. >> i'm being honest. you know we can't predict. >> i know. i know. >> you could say the same thing about the stock market though. deep in the s&p 500, 166 a 5 and if we drive hard we might get to 1100 hundred pretty soon. >> thanks for dropping by, now i'm totally bummed again. >> it's good to see you both in person. >> you wanted honest reporting. >> the headlines cheered me up but now the details are -- all right, thanks, guys. appreciate it. up next, word on the street about bernanke. >> and the buzz beyond the trading floor on the case-shiller numbers. we'll be right back. 
9:17 am
9:18 am
9:19 am
welcome back. bob pisani on the glory of the new york stock exchange. the announcement of ben bernanke being reappointed trumps china's news. we did get a brief popup when the case-shiller price index
9:20 am
came in better than expected 15 minutes ago. very cautious comments from border, burger king, group of companies. border reported a drop in sales. they did okay object earnings front. bad investment, music has hurt them. burger king, up today. top estimates on the earnings side but they, too, experience a decline in the same store sales. for at least the next six months. great news at chico's, bottom line same-store sally increased for the year compared to the same period a year ago. rebecca, how are we looking at the nasdaq? >> got to love that top-line growth, yeah. yahoo! in focus for two reasons. first up, they're upgrading their e-mail. this is something we heard a lot about. instant messenger and website. they're trying to go head to head, toe to toe with google. this one way of achieving it.
9:21 am
on top of that they're buying mach 2 which is the arab online fredster type network. they're buying it acquiring 16.5 new users through that acquisition. in the meantime, google getting an upgrade today big equity. apple, a very interesting story about apple, essentially, he's focusing on their new tab will the device but the story in the "the wall street journal" is also saying that steve jobs may be more involved now that he's back than ever before. he wrote them an e-mail, however, saying they're getting parts of the story, some very critical detashlgs wrong. we'll keep seeing that unfold. let's get over to brian shactman for more on oil. i'm sorry, back to mark and erin. >> no problem. we got a lot going on today. thanks, rebecca. >> up next, the word on the street and the buzz beyond the trading floor. >> what is more important today, bernanke or case-shiller? the futures do say one of them trumps the other.
9:22 am
we'll explain.
9:23 am
9:24 am
we're back. we're live on the floor of the new york stock exchange, the futures right now are off their highs but still pointing to a decent open for the dow, maybe 40, 50 points or so higher. i'm joined by bernie mcsherry from cuttone and company. bernanke, good news, i guess. >> i think so. the market doesn't want any more uncertainty. the market like consistency.
9:25 am
chairman bernanke has made some reassuring statements about ability to unwind things. let's hope he can continue to do so and we'll respond positively, i think. >> we're 9500 on the dow chchlt comes first, 9000 or 10000? >> i'm going to stick with 9000, i think we're going to peter out at in point along here, at least that's what i've been banking on. >> what would change your mind? let me preface that. we just got the case-shiller which mr. schiller himself came down here to the exchange to tell me and erin, it looks good. until it looks bad again, he said. but you know, we're starting to get some good news, but still, you are grumpy. >> i am a little bit. i think the fall position is is to rally. unless the really bad news comes out, the market is taking an
9:26 am
acute rally. but it's enough for us to pull back a little bit. we're getting to that september-october period and we've seen so many times bad things happen in that period. so as things getting closer, i'm looking for downward movement. >> september does have the worst months in the stock market and october brings bottoms. big bottoms. let's get back up to erin. >> let get the buzz from the beyond the big board. trader with blue capital group, good to see you, sir. obviously, if you look at the futures, it's pretty clear which headline the mattered more for stocks. there's doug. and that would be, what just happened with housing. so what do you read into case hill iser? something to celebrate? >> i think so. you see the reaction in the futures right now. right now, we have a slew of numbers out this week. i believe we have consumer confidence later today. gdp on the horizon. home sales. let's see what those bring, but
9:27 am
s staying in the 1030s in the s&p is today is important for the market, erin. >> all right. doug pskalo, thank you very much. we've got the final countdown to the hope opening bell on the other side of the break. we'll be back. 
9:28 am
9:29 am
ever want to look over the shoulder of a seasoned stock trader? well, here's your chance... i'm running strategy desk from td ameritrade to set up a trading strategy based on how i think the market's trending-- right now i'm looking at a 20-80 stochastic cross. now, i could be running multiple strategies... my own tweak or some combination-- but for now--this is good... this is strategy desk, advanced technology for traders from td ameritrade. it's designed specifically for traders. with strategy desk i can compare the 20-80 with other strategies and back-test them all. multiple strategies. multiple stocks. over time. and i can look at that at the symbol level or have it charted out for me more visually. and i'm not trading on emotion... a buy here...a sell here... there you go. i just hit a buy point and strategy desk fired off a trade. once you trade with it... you won't want to trade without it. td ameritrade. independence is the spirit that drives america's most successful investors. announcer: trade commission free for 30 days plus get $100 cash when you open an account.
9:30 am
welcome back to "squawk on the street." the opening bell is set to ring in one minute. time for our one thing we're watching. that one thing that curly said was most important in life. >> you want to go first? >> no, you go ahead. >> my one thing is just delving into the case-shiller numbers. the markets to watch are cleveland, dallas, denver. why do i pick them? >> i didn't know. because i don't think the browns can do it. the cowboys, maybe.
9:31 am
>>. the broncos, i don't know. >> year on year, the 10-city composite is down 15.1%. those three markets down. 3, 3.2 and denver 2.6. >> year over year. that's not bad at all. >> the closest markets to break even on year over year. the next best market is a 5.9 out of boston. then to 10% in charlotte, all the rest are double digits. those three markets are the closest to hitting break even when you talk about hitting bottom truly is the definition of it. >> no disrespect to cleveland, but i never would guessed that would be a market that was break even. they're in the rust belt, they suffered along with everyone else. >> they would say they're responsible midwesterners, mark. >> i'm glad to hear that things are not that bad in cleveland. here at the big board. md on, sticker em.
9:32 am
celebrating its recent ipo. sti sticker recon, provider of automation services to chinese oil and gas companies. >> let's get to our market reporters. we are open, up just about 20 thanks to that final case-shiller numbers. bob sis seanny. >> china was up 6.2%. that hasn't elicited a lot of shrugs because bernanke was the most important thing. case-shiller got had brief popup. that's really helping, that's very good news. that's the second month in a row we're up now. toll is up. walk over to hovnanian. looks to opening up 2 21 cents, about a 5% increase. so all the builders are up. cautious comments from most of the big companies including
9:33 am
burger king, staple, borders. board hearse a big decline in sales. big borders, supertour, remember, they made a big investment in music that didn't pan out for them. also, burger king, they're up here. earnings are better than expected. sales were down. they didn't get any 2010 guidance. they talked about continuing uncertainty. but chico's has been a champ this year. they were disastrous 2006 through 2007, just opened up 6%. same store sales increase, one of the very few companies that had an increase in same store sales. they are turned that company around. trader talk. rebecca, how are we looking at the nasdaq? >> hey, bob, slightly higher off the open here. about 0.3% to the up side. y yahoo! two real stories on this one. first of all, they're buying maktoob.com. it's an arab online visiting center essentially. the other component is one we knew was coming down the pike.
9:34 am
it's the fact that they are really updating, trying to update their instant messaging, e-mail and search pages to better compete with the other big player in this space. meantime, google is up 0.3% of. today they gut an undate. you do it see it at 470 right now. apple share, up 0.5% right now. they are working on this new tab will the advice at apple. the ceo steve jobs, now that he's back in the office. "the wall street journal" story is talking be at fact he's playing this major hand in the marketing of the project, n development of the product and is sounds like some folks internally think he's overstepping his reach. they were use to a bigger level of freedom. that's the story in "the wall street journal." they did send an e-mail saying they got some critical fact,s wrong. one point, krin thinkian college up 12%. big beat there.
9:35 am
all of these places of academics have been doing particular well in these worst of times because a lot of people are going back to school. time for brian shactman at the nymex. >> hey, rebecca, thank you very much. a lot of traders say we're just waiting for inventory numbers starting with american are petroleum institute. we might get a sideways beat into it. just turned positive when it comes to crude. no real bernanke bounce. international headlines bob talked about how china's drop in equities didn't have much of a factor in terms of new york stock exchange but has people watching here. iraq, taking bids again on the oil fields outside of the top one. are things to keep an eye on. we still have resistance at $57 $75.
9:36 am
so watch that one. gold traders are keeping a close on that. >> whether it's the greenback, the fixed income market, there's obviously a correlation with commodities, with equities. today, supply is going to be a big story, whether it's a big issue or not, we know that there's a lot to this issue. 99 billion worth. 27 billion, one-year bills. 37 billion, and the most important one is the one billion and twos. the two-year goes off at 1:00 eastern. if you recall, i happened to have been at hx a month ago in july when we had a 2-year did didn't quite measure up.88 will today be another one of those days? time will tell. one thing we know for sure, the interest in ply is going to grow as supply grows. back to you, mark. >> all right, thank you very much. rick santelli. stocks higher at the open on the housing data and ben bernanke's reappointment. bernanke's reappointment was
9:37 am
good news but no surprise. let's get your cnbc edge. steve loft, sceo of global investments at federated investors and ben gert at highmark. first reaction to the bernanke thing? >> this is good news. it takes a concern of independence that's a concern of ours for highmark clients off the table t is important that the u.s. federal reserve appear to be independent and is independent i think that takes the issue off the table ands fed can start looking forward to a more critical issue, which will be their exit strategy. >> steve? >> it's a positive i6789 i think it was pretty well flagged, but certainly takes that uncertainty off the table. i agree, it's positive for the markets. >> we got good news for case-shiller. unless you talk to bob schiller, trying to pull the plug on his
9:38 am
own good news. what's your view of where we are in this economy? >> we think we're in the middle of a v-shaped recovery. we're looking at housing, jobs, and gdp numbers itself. housing numbers confirms for us that the housing markets is bottoming, that's a pretty important thing. actually the month over month which no one is focusing on. the month over month change in houses prices on this case-shiller data was up. >> that's right. people say this can turn around in a heartbeat. >> this is two or three months, now, people stoort see the psychology, house prices down 50 to 60% off their highs. people see this, low mortgage rate, they start coming back into the market. >> dave, let me ask you about case-shiller but with particular reference to what steve just said and a point erin made during the interview with schiller, yes, things have turned around but we're so far
9:39 am
bow low where we were just a few years ago, how can we have strong economy if homeowners still feel relatively poor? >> this is a very important question. and you know, we've had the national association of realtors which tends to run about 5 weeks ahead of schiller. so we knew this data five weeks ago. it's not a big surprise and in fact we got the national association of realtors last week saying prices were up 7% in july on an average basis. >> from june or from a year ago. >> no, just in the month. we're seeing very strong numbers coming from these reports on the national association of realtors, which is actually leading case-shiller. n now, what's important here is that we're running about 500,000 in terms of starts. were see the average at about 1.5 million on an annualized rate in terms of housing construction. it is very important that we start to see an increase in housing starts.
9:40 am
having the housing market bottom is very key to getting people back to work. a very important part of what we see in terms of employment losses of course has been resident construction. and so as we see the turn in housing, we would expect housing starts to start to pick up and that will start to help bolster the economy. we're looking for growth of about 2.5% next year for gdp and at about 3% in 2011. those are very strong numbers as we come out of this recession. >> steve though, i guess it comes down to a question of, especially to this point, it could take a very, very long time if ever to get back to where we were. we don't need to get back to where we were necessarily to have the market go up. but at what point do you look at a 50% rally or one that gets bigger sand ahold on, what's the growth potential of this economy? >> the three stages of the rally, the first stage is when you realize the world not going to end. all the shorts that bet it would have to come back in. that was move. >> that was the move we got.
9:41 am
>> the march lows to major. ebb th then the next stage is the cost cutting earnings beat, which we had between june and the end of july. most people discount that, low quality, just cost cutting. the next phase, which is the phase we're entering right now is going to be the top line deep. that going to drive outsize earnings gains because people have cut back cost structure, little bit of top line growth in the economy. we think people's numbers in the next two quarters are way too low on the gdp rebound. that's going to drive a top-line move is that going to have an explosive impact on earnings. that will be the last leg of this. we could probably overshoot and hit 1,200 in the next three or four months and from there it's going to be a lot trickier. >> right. from there, you get to the question of after the stimulus, the big pop, what then? but that's another conversation. >> let's worry about that later. >> thank you, steve, day of. up next, inside the numbers
9:42 am
from staples. that stock is up more than 50% since the haines bottom. but profits fall iing in the second quarter. we'll break it down and find out what it says be at consumer. plus obama backing bernanke but others want to boot gentle ben and the entire central bank. chief economists from delta global advisers makes the case why the country doesn't immediate a fed. we'll be back. businesses more efficiently,
9:43 am
so we've brought in a team of experts to help. one suggestion is to make your shipping more efficient with priority mail flat rate boxes from the postal service. call or go online for a free supply and up to $160 in offers from authorized postage vendors. shipping's a hassle! weighing every box... actually, with flat rate boxes you don't need to weigh anything under 70 pounds. if it fits, it ships for a low flat rate. ok, but i ship all over the country. you can ship anywhere in the country for a low flat rate. ship international, too. yes, but i ship hundreds of things, in all sizes. great, because flat rate boxes come in four sizes. call now and we'll send a free supply, plus up to $160 in offers. when you're ready to ship, we'll even pick them up for free, no matter how many you have. priority mail flat rate boxes only from the postal service. a simpler way to ship.
9:44 am
9:45 am
in this morning's street cap, citigroup says it has substantially boosted efforts to modify mortgages, saying it helped 108,000 homeowners modify loans, up nearly 30% from the first quarter. but see, a report from fitch
9:46 am
says it hasn't done any good. bank of america and s.e.c. defending their settlement over the executive bonus paid out to merrill lynch saying it did not mislead investors, s.e.c. says the fine fully takes into account the seriousness of the bank's ph r misconduct. examiners are looking into weekly meetings with wax. the fcc and financial regulatory authority will ask gold maman f more information. but there have been no accusations that goldman violated any securities laws. >> staples trading lower. now the numbers that came out from the company in the second quarter like all the retailers are looking at the quarter that ended in july, they had a 40% drop in profits, still in line with expectation. company cfo was on "squawk box" earlier this morning and explai why staples declined to provide
9:47 am
a forecast. >> our customers are coming bac to us, they're coming back with to us with more regularity but not buying the chris skregsary things they used to buy from us and the demand while it's good  and improving is not going to come back suddenly, so we don't feel like we have the visibility we have in other times. >> joining us now fresh off the company's conference call is dan binder, managing director at jeffries. the only thing concerning about that, it makes sense, but you don't imagine staples, back-to-school is a huge part of their business, much more so than at christmas for other retailers, right. so if he doesn't have visibility into the next couple of month, it might seem like that's concerning. is that wrong? >> two points, first, the company has not been providing earnings sales and guidance. so this isn't really a depar chur from what they've been doing. it's basically in line with their recent practice. secondly, you have a lot of
9:48 am
retail e retailers that are no longer providing guidance because we are in uncertain times. thirdly, i would point out just off the conference call, management did indicate that the back-to-school was off it a. >> start, while we have seven weeks in front of us, they're pleased with the results early on. >> quick follow to that. in a "the new york times" profile, they mentioned staples, that staples was talking about staples brand selling more than anything else. one of the obsessively priced conscious consumers they had ever seen. did they talk about that on the conference call. >> they didn't touch on private brand as they often refer to it as, but we have seen a trend across retail as consumers seek out value. there's a trade down to private brand, not just at statement, but at other stores as well, walmart or target. we are seeing that shift down as the consumer seeks out value. >> should we expect them to do well in back-to-school? >> i think when he. what we heard from management on
9:49 am
this call was one that back-to-school was off it a good start, two, the promotional environment was similar to last year. and three, i think that while they weren't specifically saying, i think we could still see sequential improvement in comp store sales as we move through this year. we're seeing small business and small business delivery, improving sequentially, that group was the first to go into the recession, appears to be the first to show imimproving trends which include more large account delivery. >> we've seen that before, haven't we? >> correct me if i'm wrong, because the memory isn't what it used to be, but i'm pretty sure in the last recession, statements didn't d pretty well, because people forced out of work, started forming their own business. >> that's right. that is a trend. unfortunately the bigger trend is soft er spending, but yes tht
9:50 am
is correct. what you're seeing right now is staples is outperforming their major competition by several hundred basis points on the top line. they're staying share, they're buying the best in the group, they've got the lowest cost structure, the most profitable, the best run company and i think they're going to perform very well out of this recovery. >> thank you very much, dan binder, appreciate you taking the time right off the staples conference call. next stocks on the move, sherwin william, the paint maker. >> dyc on dac, because you clicked on bank of america, you want to know more on this best performing dow component performing up more than 350% since you know who's bottom. the senior managing director of csy group, why they will stay as interested in the stocks. >> mark used to be so s. self-deprecating, lemming me raefr to the bottom, but now --
9:51 am
>> i'm proud of my bottom. you can do both. special lease offers now available on the 2009 is 250.
9:52 am
9:53 am
hi, folks, attention shop, maybe i should say welcome back to "squawk on the street." i want to draw your attention to
9:54 am
another retailer today. check out big lots. number one perform, number one gainer in the s&p, up 8.5% here today. also in the russell 1000. their payrolls went down, ad costs went down, profits went up. market likes t looks good it's all work iing for big lots righ now. harman came out with a smaller than expecting loss. they think that stock is headed to $44 a share, nice move from these levels. another retail earnings sherwin william, down about 1% today, one of the few declining retailers. i checked the retail index and all 35 members were higher including staples. that turned positive. it might tick down. but equal weight to overeight in morgan stanley and ruggle 1000. bank of america, yes that low hit in the spring, up almost
9:55 am
400% in that time frame, that means it has quintupled, one of the most clicked. let's talk of the b of a situation. head of research, good to have you with us, ed. >> good. how are you? >> bank of america. we talk about it and citi, bank of america pretty gets all of its business here in the u.s. is that something that is a catalyst now for the company? >> i don't know that that's too much of a catalyst. we're seeing economic recovery to some extent globally, i think more of the driver of the recovery for b of aa is they have, number one, solved their capital issue. the liquid dye issues of the company are rehind us, so raising debt, not a problem. borrowing it in the wholesale markets not a problem. now it's just a matter of sort of grinding through the
9:56 am
remainder of the credit issue, but obviously the market has turned hopeful in that regard as well so we're seeing many leading indicators of economic recovery. >> what about in housing, especially with the foreclosure, the report mark was citing earlier today, about these reworks which are falling back into failure and foreclosure at a greater rate than ever before what does that mean for bank of america given its exposure to the u.s. mortgage market? >> well, bank of america, clearly one of the two largest mortgage lenders in the united states. that will be an issue for the company, that's going to be credit loss that they're going to have to grind through over the next 12 to 24 months, but i think the street is factoring that in fairly reasonably well in terments of the earnings outlook. we are seeing some fairly substantial leading indicators that at least lower price and mid tier priced homes are
9:57 am
starting to stabilize. we saw that in the case-shiller data that's come out most recently in terms of home prices, and we're seeing also signs of stability in early stage delinquencies on the consu consumer side and especially in mortgage lending. so there are some leading indicators that this problem will ultimately peak out in a few more quarters and then begin time prove. >> you know, i haven't kept track on a bank by bank basis, how much have b of aa shareholders been diluted over the past year or so? >> if you count the merrill lynch acquisition and the capital raising they did post the stress test, approximately double. so you know, that's obviously not great news in terms of the stock being able to get back to its old heiss. >> that's where i was headed, yes. >> so that's unlikely, getting back into that $50 range in the near term.
9:58 am
but again, you know, this is aing to that obviously got very, very low. was being talked about in the same breath as citigroup. you have to look at citi getting diluted at 4 to 5:1. b of a, more like 2:1, some of that dilution came from the merrill acquisition so they get a strong business as well. >> all right, ed, thank you very much. ed najarian. >> thank you. >> because you cloingd bank of america. moments away. aen to. a ton of breaking economic data. right at the top of the hour. we will deliver it on a silver platter. consumer confidence. home price index. >> it will come with coleslaw, chips, tomato. >> federal deficit numbers. >> we'll be back. tdd#: 1-800-345-2550 tdd#: 1-800-345-2550 if i'm breathing, i'm thinking about trading. tdd#: 1-800-345-2550 i always have my eye out for a stock on the move. tdd#: 1-800-345-2550 doesn't matter if a company sells computer chips
9:59 am
tdd#: 1-800-345-2550 or, i don't know, fish and chips. tdd#: 1-800-345-2550 i'll look at all kinds of stocks before i settle on one. tdd#: 1-800-345-2550 if i think i'm onto something i'll check it out, tdd#: 1-800-345-2550 you know, see what other traders are up to. tdd#: 1-800-345-2550 when everything feels right though, tdd#: 1-800-345-2550 that's when i get serious. tdd#: 1-800-345-2550 and the minute i get into something, tdd#: 1-800-345-2550 i already know when i want to get out. tdd#: 1-800-345-2550 of course, every now and then i'll talk with somebody tdd#: 1-800-345-2550 who knows what i'm trying to do. tdd#: 1-800-345-2550 (announcer) switch to schwab today. tdd#: 1-800-345-2550 you'll get the tools, the technology tdd#: 1-800-345-2550 and the support to trade your way. tdd#: 1-800-345-2550 go to schwab.com/trader tdd#: 1-800-345-2550 or call 1-800-540-7304 tdd#: 1-800-345-2550 right now. tdd#: 1-800-345-2550 but opportunities can vanish like that... tdd#: 1-800-345-2550 ...so most days, i'm right there tdd#: 1-800-345-2550 when the market opens.
10:00 am
and you know what, it works. nutrisystem for men: flexible new programs personalized to meet your goals. what's great about nutrisystem is you eat the foods you love and you lose weight. i'm dan marino. i lost 22 pounds on nutrisystem and i've kept it off for three years. for a limited time, get an extra three weeks of meals free! that's right, you can get an extra 21 breakfasts, lunches, dinners, desserts, and snacks. that's 105 meals free! i had awesome results. i mean, i lost 22 pounds, my goal was 20, it came off fast, and the food was great. it's what every guy's been waiting for: it's healthy weight loss and it's flexible.
10:01 am
with prices as low as $12 a day, you'll save hundreds over other weight-loss programs. order now and get an extra three weeks of fantastic meals. that's right, 105 meals absolutely free. call or click now. guys, you can do this. just pick up the phone and call. you will lose weight. rick santelli here. august consumer confidence, hold on to your seats, 54.1. that's from an upwardly revised july. originally reported under 47. now 47.4. spectacular move.
10:02 am
hey, can 5,000 surveys be wrong on this one? i can tell you that the psyche of america seems to be highly correlated with the price of the dow. having said that, this is a good number. we want to pay particularly close attention to the behavior of interest rates here, especially in front of 99 billion in supply. 42 billion of which of course are 2-year notes. home prices rising. ben bernanke, reappointed or will be, he still has to be confirmed, not much problem expected there. let's start with bernanke and john harwood in washington. >> mark, barack obama told everybody he wasn't going to make news on his vacation. that turned out to be wrong. and it has something to do with that consumer confidence number that rick santelli just told us about because obama doesn't want to interrupt the positive feeling about the economy. he said this morning on martha's vineyard that ben bernankeky for
10:03 am
a second term has just the right combination of skills. >> as an expert on the causes of the great depression, i'm sure ben never imagined he would be part of a team responsible pour preventing another. but because of his background, temperament, courage and creativity, that is exactly what he helped to achieve. that is why i am reappointing him to another term as chairman of the federal reserve. >> ben bernanke of course appeared alongside president obama and he signalled that he's already, himself, beginning to make the psychological transition to better times because he told the american people and the president that he's not ignoring looking down the road, those concerns about inflation. >> mr. president, i commit today to you and to the american people that if confirmed by the senate, i will work to the utmost of my abilities with my colleagues at the federal reserve and alongside the congress and the administration to help provide a solid foundation for growth and
10:04 am
prosperity in an environment of price stability. >> now price stability is a reference, of course, to inflation, which is one of the things wall street is concerned about. but the biggest decision facing bernanke now is when to begin extricateding the fed from all the intervention he has been credited with by the president. i wouldn't expect it though, erin, until after the unemployment rate begins to go down, and all of america begins to breathe a sigh of relief about this economy. >> all right, john harwood. thank you. in another interview here, in case-shiller's latest report showed home prices are in an upswing in the second quarter of the year. citi composites posted second consecutive monthly increases 18 of 20 saw annual returns compare to a year ago. cleveland, dallas, denver are the close toast break even year on year. las vegas and detroit continuing to struggle severely by any
10:05 am
measure. >> let's see how all the economic news is playing out in the markets. rick? vila, fixed income derivatives at cme. what do you think of the market today? >> on the fixed income side, this is certainly a dent in it. that is consumer confidence number was way more than expectations and it has succeeded in tamping down the treasuries along with impending supply coming along. c conversely, it's certainly helped reinforced the bid that is currently there in equities, but something to remember, c consumer confidence has to translate into consumer spending at some point or the rally in equities will not be sustainable. so a temporary effect in equities going higher. >> don't you get a little tired of being skeptical of a rally that is now almost 3,000 points on the dow? >> i think given what's going on here over the last year to 18 months, a measure of skepticism
10:06 am
is still justified. the earnings that need to be coming down the pipeline and the consu consumer spending coming back into the market to help bolster gdp, i didn't think there are yet on a consistent basis. so i think this rally is a bit overdone at this point. >> bob pisani, let's get to you, your take on the rally. he's come nag moment, but when he comes, i want him to weigh in on your point, which is there has been so much skepticism and yet we have come up 3,000 points. >> 3,000 points. they still say i'm cautious. >> but the problem is if they throw in the towel now and jump on it, it starts to peter out. it's a horrible, psychological conundrum, bob? >> you got to climb in on the bottom when it happens. >> bob, i'm sorry. >> hello there. i think the important thing is we've got two data points that
10:07 am
help the bulls out this morning. consumer confidence, a little better and we also got some numbers on the home price front that show two months of gains, we haven't seen that, we could see that in the markets this morning, so the home builders are doing well. kb home, lennar, pulte. remember, centex is gone now. so pulte has everything. i want to also note, this attention from the traders, financial outliars are strong this morning. freddie mac, is up, fannie mae which has doubled. fannie mae was 90 cents four trading days ago and citigroup has been notably strong here. so yesterday, these three stocks count counted for 25% of the trading volume at the new york stock exchange. rather amazing, and accounted for a lot of the liquidity that we saw on the new york stock exchange. but it's not just three two groups. as we saw better numbers at 10:00 eastern time, we also saw
10:08 am
some of the retailers did better. chico's is one of the very few companies that actually reported increase in same store sales. they really turned the company around, but retailers are done very well the last quarter and there's a lot of detail about whether given the lack of top-line growth, those stores also had a bit of popup. there's your big group, financial, retail, home builders. how are we looking at the nasdaq? >> very similar positive to what you just talked about. with those consumer confidence figures, once those came out, a lot of consumer related names here popped. they weren't necessarily in positive territory, but are now. look at starobama, just to give you a broad swath view of how these consumer related names are doing here. zumiez is up 3.1%. staples not a great earnings story, profits fell, but still in line with executivation so they got the benefit of that and
10:09 am
the symptom is 0.7% of. mime costco is up 3.5%. but i just wanted to point those names out because they really did see that pop after the 10:00 eastern consumer confidence numbers came out and a the last name gearing to end with here has sales in its earning report that most people would drool over in the best of times. cor corinthian college, up 11.3%. keep in mind, the academic for-brost institutions did very well at the start of the year with obama in office, however things pulled back after a february peak, right now, however, it looks like at least they are keeping up with the trend, particularly over at c i corinthian colleges, their student base up 24% in the last quarter. let's get over to brian shactman. >> fascinating trends here. i can't keep my eyes off the
10:10 am
board right now. i want to pull up an intraday chart. i want to pull those consumer confidence numbers out. we got to 74.96. the door was just slammed shut and now we've gone from pushing 74.96 to 75, now we're back looking at going under 74. really interesting to see this push back. we were are completely positive across the board at one point. natural gas has been a lag guard all day long. traders think we'll be sidesome ways starting with the api number at 4:30 eastern time. gold also pulled back off the high, pretty much a strayed dollar trade right now. weaker delay, gold to the upside. silver up, copper down. c copper seems to be really, really tied right now to china. of course china equities weak overnight but also earnings from the miners weak overnight in
10:11 am
china, that having an impact. back to you. all right, up next, president obama may have faith in ben bernanke, but not everyone is on board with that we'll talk to an economist who wants to abolish the fed altogether. >> and a handful of companies are firing on all cylinders right now. they are posting growth in sales. names being named later. and later, a jobless recovery f we get one for the second time this decade, what does it mean? can we have a recovery without consumers? we'll be back. um bill--
10:12 am
why is dick butkus here? i hired him to speak. a lot of fortune 500 companies use him. but-- i'm your only employee. we're gonna start using fedex to ship globally-- that means billions of potential customers. we're gonna be huge. good morning! you know business is a lot like football... i just don't understand... i'm sorry dick butkus. (announcer) we understand. you want to grow internationally. fedex express
10:13 am
10:14 am
i'm hampton pearson live in washington, welcome back to "squawk on the street." we have new budget deficit estimates from both the congressional budget office and obama white house. first from the congressional budget office, they're now saying that for fiscal 2009, they're looking at a $1.6 trillion deficit at roughly 11.2% of gdp, the highest since world war ii long-term deficits for the years 2010 to 2019, cbo says that number is going to be 7.1 trillion. that's up 2.7 trillion from previous estimates. now earlier, we gut an update from the obama white house, they're looking at $9 trillion in deficits through 2019. $1.5 trillion in 2010.
10:15 am
$1.12 trillion in 2011. roughly 4.74% in 2010 and 7.4% in 2011. they see unemployment averaging 9.3% this year, peaking at 10%. then an unemployment rate of 9.8% in 2010. also forecasting that the recession has basically ended in the second quarter of this year. gdp negative 2.9% for '09 and gdp a positive 2% in 2010. now, the reason for those different growth figures on the out-year budget projections have to do with some of the budget assumptions. cbo, for example, basically assumes those tax laws that are on the books that may in fact expire, that will happen. a lot of the obama administration administrations without the higher out-year
10:16 am
deficit figures have to do with congress and white house will do something about the future of tax policy and tax cuts. just one example, the debate just beginning, bottom line, what these higher figures really mean, they put at risk much of the president's agenda, especially the $1 trillion cost for overhauling health care. mark? >> i'm glad you brought that up, hampton, thank you very much. because cbo has specific rules it must follow. >> absolutely. and hampton raised the one where if it's the law today says a tax break is going to expire in whatever, the cbo must assume that will happen. so that's where you get these differences. so any time you get the cbo which by the way, i'm not new york the cbo, you have to lock at their underlying assumptions. president obama nominating federal reserve chairman ben bernanke to a second term earlier this morning. while the market likes the news, not everyone is welcoming the nod to bernanke and the fed. joining us now is michael pento,
10:17 am
deltd that global adviser chief economist and mark bitt. in er, wells fargo senior economist. you say get rid of the fed entirely? >> absolute ly. don't you agree with me. since 1971, the dollar has lost 97% of its purchasing power against gold and down 13% in march alone. this has not brought us stable prices it has brought us inflation and a history of rolling asset bubbles. and it's time we got rid of the federal reserve. the entire institution should be canned. >> you really need to get in touch with your feelings here, michael. >> i'm trying. i really try. >> mark, what do you say, are you one of those guys that say get rid of the fed, go back to the cave? >> alan greenspan was all for a gold standard or at least behaving like you're on a gold
10:18 am
standard. why is it so heretical to think this way? >> it's just too much of a change. it's not possible fors us to get become to a gold standard if you're a gold standard, not in a modern economy with the innovation and the growth that we have in our economy today. it's just not very reasonable to get back there. certainly the fed has to balance its mission between trying to promotion price stability and trying to keep order in the broader economy and i think that's what gets missed in a lot of this debate is the fed is one of the stabilizing mechanisms we have in our economy. >> oh, no, oh, god. >> you're not going vot confidence to engage in all sorts of business transaction. >> we need prices to go up a little bit, so we feel better about -- part of inflation is psychological. >> nominal only -- >> hold on, we've got breaking news. diana olick. >> we've got the fhfa home price index. i'm going to confuse you because after the good news from case-shiller.
10:19 am
home prices fell 0.7% in the second quarter of 2009 from the first quarter of 2009. they're down 6.1% year over year. the good news is that they're falling less steeply than they have been but quarter to quarter, you're still seeing that decline. now to understand why these indexes are different, you have to know that the fhfa does only fannie and freddie loans. that is that's how they track home prices is purchases of homes with fannie and freddie conforming loans. the s&p case-shiller measure the top 10 and 20 market composite index in the 10 largest and 20 largest cities in america but that's any home sale not just fannie and freddie. so these numbers are always a little bit more conservative on the fhfa number, but they are still seeing prices decline quarter over quarter as the case shhill is er saw increase for t first time quarter over quarter, again, you're measuring different things but the important thing is to note is home prices are still falling nationwide, year over year and and on the lower end of the
10:20 am
market, which is this is measuring, they're still falling quarter to quarter, so hope it's not too confusing buts that the data from the government. >> thank you very much, diana olick. let's get back to michael pento, who we sbruptded mid-vent. let me put your feet to the fire here about a gold standard which mark didn't get into the sales. the government can only print as much money as it backed by its gold. can which we discovered in the '30s have a dramatic impact on strangling an economy. >> no, no, the inflation in the mine supply of gold is around 2% per annum, which just about the same as population growth plus productivity growth. so you have stable prices and growth on a gold and silver standard. it's part of our constitution. we should bow harv like that growth should never grow at 20%
10:21 am
per annum like the early part of this decade. >> marx your response. >> i agree that money should never on a sustained basis grow at a rapid rate but 2% is not keeping in pace with productivity and labor force growth it would be at least 2.5 and maybe 3. that sounds like a little difference but over a number of year, it's a huge difference and you're talking about the difference in doubling living standards every 25 years versus doubling them 50. >> well, the mine supply of gold and silver would easily be 2.5%. and it never was 20%. you know, before alan greenspan became a corrupt politician, he said the only way to protect savers through the conversation of inflation was to at least behave as if you're on a gold standard. >> i think alan greenspan and ben bernanke did have very good job in some very challenging time, but in terms of managing for this crisis, i think there's little debate that bernanke has done an excellent job of getting us through it.
10:22 am
>> bernankes were on the board of governors from 2002 to 2005, he didn't say boo about a housing bubble, now he increased monetary base by $1 trillion, destroyed our dollar, all our gain are nominal in nature and everyone is lauding him like the second coming of alan greenspan. this is ridiculous. we must break the nature of this rolling asset bubld and this artificially inflated economy. >> wow. i tell you, i just don't think there's any mechanism that's better than the federal reserve to replace it with. you abolish the federal, a gold standard is not going to do it. what are you going to replace it with. >> how about milton friedman's laptop? >> i'm not sure that we can replace it with milton friedman's laptop, i'm not sure that we could get a rule that could be flexible for an economy that is constantly innovating and re-creating itself that periodically hases innovation of the internet, mobile telephones, i don't know how you're going to capture that. >> we had the industrial revolution.
10:23 am
>> mark, both of you, how do you prevent the fact that a lot of crises that we've seen around the world have been driven by a surge in liquidity, argentina, hyperinflation in the u.s. how do you address that? >> let me get back to the other point first. we had the industrial revolution, we also had depression that came around every couple of years, too. >> no, no, no you had stable prices. you look at the data. you had 1930s -- >> you had periods of inflation followed by periods of deflation. >> like we have now. >> that coincided with the depressions that we've had. we haven't anything like that volatilit volatility. >> but that all became because we we were trying to go off the gold standard. you have to have an overseeing body that increase the money supply is con men's rat with population growth, period. you don't need a federal reserve and you eliminate all the rolling asset bubbles like the tech bubble and the asset bubble. you get rid of them, you'll va balanced economy and 40% of all
10:24 am
the job growth coming from the real estate sector like the early part of the decade. >> that is not true. >> what's not true? >> but i do agree we should have a more predictable monetary policy. i don't know that it's possible all the time, but in terms of allocation of resources, resources can get misallocated under a gold standard judgment as easily. >> it's the inflation that causes the imbalance in the economy, not bay h paving like you're on a gold standard. >> it's the changes in prices that causes the imbalance. >> mark gets the final word. we got to go. gentlemen, thank you very much, michael pento, and mark vittner. >> lesson on stocks, think consistent tom and bottom line growth. find out next. later, could the global economy recover without the american consumeer? it still is perhaps the single most important question. by the way, as we get to our
10:25 am
panel of experts when you look at the data rick santelli broke there was a big jump linked to spending. we'll be back. some people buy a car based on the deal they get.
10:26 am
others by the car of their dreams. during the lexus golden opportunity sales event, you can do both. special lease offers now available on the 2009 es 350.
10:27 am
10:28 am
welcome back. we just took some headlines we want to share with you. from alan greenspan. cnbc from his assistant, quote, dr. bernanke has done an excellent job in extremely trying circumstances and has earned a new chairman. that came from the former fed chief alan greenspan. while the economy has taken a toll on a number of companies, our next guest has some under the radar names firing on all cylinders, we used that term specifically because it isn't just cost cutting to profit growth, these are companies with top line. let's get straight to the names. who's got it going on the top? >> great to be with you, erin. last week, we saw great earnings from sales force.com and
10:29 am
aeroposta aeropostale, both not only beat estimates handily but also produced strong top-line growth as well. it's been well documented in recent weeks that cost cutting has resulted in many companies beating earnings estimates but top-line growth has been a bit weak. so these thams last week that did well and three other names that have been appearing on our growth screens as well. so there have been a lts of good stories in terms of both bottom line and top line beats. >> you've got a bunch of names here. ie mentioned aeropostale, bridge force, lumber liquid daters, hardwood flooring and bidu, the chinese company. did they get revenue growth because they bought a company or is this real revenue growth? >> this is is real revenue growth, quarter after quarter, of not only consistent earnings growth but sales growth as well.
10:30 am
so these five names have been appearing in our growth screens for several month, outperforming the markets, they have a lot of characteristics we've seen before big price moves, so names like this, even though they are under the radar, they do have good institutional support, top rated mutual funds own these stocks and they are high multiple stocks with high pe ratios but also fast growing company, so their high valuation is justified because of the strong growth they've shown and strong future growth prospects. >> one i want to ask you, lumber liquidato liquidators, what in the world is giving them sales growth? >> it's counterintuitive. just like aeropostale, it's been tough. but they continue to execute. they're obviously in a niche market, they only do hardwood flooring but you go back in
10:31 am
quarter after quarter of consistent earnings and sales growth, no blips at all, growth prospects look good. with lumber like withaters, you have a rising fund ownership, so a lot of fund managers are still discovering this company. fund ownership over the past year has doubled. so that's a good quality to see in a stock. >> pretty amazing. hardwood flooring company. year on year revenue growth. ken shreve, we appreciate it. as we know, consumer spend makes up one-third of the economic situation. at least traditionally. if the american consumers sit there and spends flat, doesn't do much, can the u.s. economy and global economy recover? two years ago, the answer would have been no. we've got an answer coming up in a moment. you're watching "squawk on the street." we're up 33.
10:32 am
♪ yes, you're lovely... ♪ what do you think? hey, why don't we use our points from chase sapphire and take a break? we can't. sure, we can. the points don't expire... ♪ there is nothing for me... ♪ there's no travel restrictions... we could leave tomorrow. we can't use them for a vacation. you can use the points for just about anything. i know... ♪ the way you look tonight ♪ chase what matters. get your new chase sapphire card at chase.com/sapphire.
10:33 am
10:34 am
welcome back. boepg and j&j up and down. big lot, in the meantime, also you can big. you heard matt nesto talking about this. 9% gain this morning and chico's and tata motors hitting one-year highs. very different story, mark. >> let's look at the markets and their internals. the dow up 37 points and the
10:35 am
nasdaq up 5.25. where is the other one, s&p is up 3.3. internally, big board, almost 3:1 winners over losers. nasdaq, not so good. 12:10, 6:5, still not bad. positive housing and consumer confidence data, what is boosting the market this market but with unemployment expected to hit double digits is the consumer out of the woods, can the economy recover with a kind of a not unhealthy but shall we sea hesitant consumer. weighing in, stephen gallagher and robert lohst. stev steven, i'll start with you, erin and i have been talking about this all morning and on previous days as well. where can we go in the economy and the markets if the consumer
10:36 am
does not feel comfortable? >> for a few quarter, actually the economy can do pretty well on growth and it's simply that production is so significantly below consumption and we're running off inventories at an amazing rapid clip, we need to see production rise just to the level of consumption and that is going to produce healthy growth readings for one quarter, probably two quarters. eventually, we need the consumer to kick in a little better once it rises to consumer level that further production gains are going to be dictated by the next step taken by the consumer. and that's growth outlook for 2010 that remains tentative or iffy, but if we see confidence rise like we did this morning and confidence rise like this morning's report, i'm actually encouraged that the consumer will be kicking in more meaningfully lie the end of year and 2010.
10:37 am
>> robert, you agree? >> i'm not sure i agree longer term, market. i believe the consumer has been debt fueled for the last 15 years a thantd gone. i don't think that's coming back in 2010 or 2015. taxes will be high, consumers will be saving more. they're paying down debt. i expect that if investors want to make money in this market, they are better off focusing on those areas of the economy that are rebalancing. consumers have been way up here in the government and industrial skters and the consumers have been down here and we'll see a gradual rebalancing of the u.s. economy to a consumer opponent of 60%, to 65% and a large government and industrial sector. if the investors are looking for growth and good investment, that's where they need to look. not for the same old consumer behavior that got us here over the last half century or so. >> stephen, is there any way to say we could have a positive or just a surprise in consumer pend
10:38 am
spending? i'm looking at the headlines today. the consumer confidence, the big beat came from the highest view of the future by consumers since december of 2007. now that's pretty incredible, if you look historically, we all know it's that expectations number that is more linked t ee consumer spending thachb anything else. is it possible that confidence does translate into spending and you get a big surprise there? >> well, i think august is going to be almost off the charts or at least off the chart for the past couple of years for auto sales. i know it's just a one-month cash for clunkers program but we're seeing the spending coming from the consumers on autos an also on housing. so two big ticket items. i think there is a lot of room for surprises when the consumer is willing to shell out the money or expose themselves to take or take on the debt to purchase such large items, it's showing our demonstrating an underlying confidence that i think is very encouraging and i
10:39 am
think at least a month and probably a quarter of surprisingly strong data. the question to me is the sustainability, not the spike. >> robert, i'm looking at my notes here, you think industrials, government and health care are going to become larger parts of the economy. that doesn't sound like great news. >> it depends on where you're invested, mark. i think if you're invested in those sectors, i'm not sure it will be great news but better news than if you are try ing in make money on the same old consumer spending stocks that we've been making money on for the last half century. there simply is a shift in the economy. i think when the consumer hit 2 72% of gross domestic product or higher. that was an overbalanced economy fuelled by debt. that's not going to come back. the question is what's going to come back instead? i think the u.s. as the dollar
10:40 am
weakens will see better industrial sales, i think that's where a lot of global infrastructure growth is going to be. it will be fueled by all kinds of basic materials, natural resource, industrial products an things likes that. and the government is going to expand a. i think investors need to make their peace with that and get on board. and i think one of the places that's going to expand is with the boomers who run out of warranty period an things breaking down. >> all right, gentlemen, thank you. stephen gallagher and robert lost. coming up, confidence, housing, budget, bernanke, lots of data points to digest this morning. we'll have market reaction in minutes. plus are employers getting ready to hire? your first look at a new job survey by career buildinger. that is next. we're at 5367. that's the high. we'll be back.
10:41 am
reading about washington these days... i gotta ask, what's in it for me? i'm not looking for a bailout, just a good paying job. that's why i like this clean energy idea. now that works for our whole family. for the kids, a better environment. for my wife, who commutes, no more gettin' jerked around on gas prices... and for me, well, it wouldn't be so bad if this breadwinner brought home a little more bread. repower america. i hope our senators are listening.
10:42 am
10:43 am
10:44 am
♪ staying alive, staying alive ♪ >> in this morning's sound check, reaction to top stories. president obama nominating ben bernanke to a second term. >> it's time we start thinking inside the box. the fed's got a very narrowly defined and exstremgly critically important disciplined role and it's gone so far beyond that now it's that hard for me to feel very complimentary about it. >> president obama ought to be commended for his choice i and many in the financial services industry hold chairman bernanke in high regard. the steps he took last fall along with tim geithner and tim paulson were unprecedented,
10:45 am
historic, not all were perfect and not every regulator bad 1,000 last fall but we're better off as a nation. >> i think i would have found someone, i don't have a particular name in mind that understoond respected the traditional role of the federal reserve and that to manage the money supply and related to the interests of the central banking policy and not getting into these other policy issues. >> all right. stocks offer the highs, now i misspoke, i said it was a high of 55, because we briefly tip dipping ip to 9620. skoe you did touch that for a second. >> yep. >> so maybe the highlight would be that we couldn't hold it it. but the other title is that we continue to move higher. joining us is john najarian, also gordon rosenblatt. which is the more important
10:46 am
headline? that we're up and the rally continues or that we went up to the high that some of that perhaps consumer expectation number but couldn't hold it? >> they're beth important. bernanke's reappointment jump started us right right out of the gate today but volatility has come back and we're getting to the spot where we have is a to get used to that those kind of movements. we got to the high and just down 50 points, we're trending back up. we're going to start seeing interesting times now. >> interesting times. john najarian, is that what we're in for? >> gordon is exactly right about that. i think the fall we could get some real interesting trades because of what just happened for cash for clunkers for instance. there's a program that actually worked, politics aside, people went out and bought cars. so rather than sending checks around, erin, getting people to go out and spend money and providing some sort of incentive for them to do that, i look for
10:47 am
more of those kinds of programs, they're already talking about energy star appliances and sows forth for your home, that if you buy that, you'll get some sort of a rebate as well. that would be great for whirlpool and other durable goods makers. >> i look for more programs like that. i would say looking ahead to 2010, i wouldn't be surprised if they did the same sort of thing to move homes by increasing rather than just putting a big screen tv in the house and cutting the price to sell, if perhaps making it more energy efficient with certain types of air conditioning and so forth and heating and then giving the consu consumer a row bait for buying that kind of a home as well. i think that could play into 2010. >> john, which comes first, the dow 9000 or dow 10000. >> 10000 is the easy answer. but the real question is do we just touch it and pull back? more important to me is the first day that we see a positive jobs report. i think that's probably february
10:48 am
of next year at the earliest. but that's going to be a much more important hurdle for us to get across rather than 10,000 touch i touching it and pulling back or getting back down to 9000, i think job creation really is the most important thing. >> dr. charlop, same question, 9000 or 10,000 coming next? >> the trend is clearly to the upside, mark. we're seeing buying, fannie, freddie, all the list of preferred spoesht associated with them, so people are covering shorts, trading with a little bit of an anxiety to get long to chase return, those kinds of things, but this thing, i agree with john here, until we get to that spot where the consumer in s in and the government is out, this going to be kind of brittle and ready to keep the volatility and we could again just not sustain these levels. >> gordo, best part of the market to be in right now? >> you have to say financials only because the way it's trending, in terms of how i feel about it, you have to hope
10:49 am
consumer durables and staples will be the best play. >> john najarian, quickly, same question. >> consumers continue to spend, that's the story of the year. consumers not debt, so i think mastercard, visa and associated credit card companies are the play. >> got to go. john najarian and dr. gordon charlop, thank you very much. there easing since february, the first time we can see an increase, you'll see a job market survey by careerbuilder. >> but first, oh, melissa? >> i like that. >> hey, mark and erin, up at the top of the hours, more on the beverageky renomination and what it means to the economy and marx going forward. major economic data on consumer spend i spending and home prices this morning. we'll discuss if we turned a corner both arenas. >> and call of the wild, should the s.e.c. institute tighter
10:50 am
regulations on the market? lots ahead on the call at the top of the hour. but first "squawk on the street" is back right after this break.e . 31 are streaming a sales conference from the road. eight are wearing bathrobes. two... less. - 154 people are tracking shipments on a train. - ( train whistles ) 33 are im'ing on a ferry. and 1300 are secretly checking email... - on a vacation. - hmm? ( groans ) that's happening now. america's most dependable 3g network. bringing you the first and only wireless 4g network. sprint. the now network. deaf, hard of hearing and people with speech disabilities access www.sprintrelay.com.
10:51 am
when people say, "hey mike, why ford? why now?" ork. sprint. the now network. you know what i do? i introduce them to the most fuel-efficient midsize sedans... ...and suvs in america. i don't know if you've heard, but this fuel efficiency thing.. kind of a big deal. anyway, ford and lincoln mercury have you covered... with showrooms full of fuel-efficient cars, trucks, suvs, crossovers, and hybrids. how's that for going green? now, get 0% financing plus up to $1,500 cash back on most ford, lincoln and mercury vehicles. go to ford.com, or visit your ford or lincoln mercury dealer.
10:52 am
10:53 am
of all the positive views we've heard this morning on housing and consumer confidence, does a turn around in the job market too much to hope for? a new poll suggests there could be stabilization. so many people are sick of hearing. but what does it mean? in a poll of more than 500 employers, more than half say they plan to hire full-time workers over the next 12 months. 60% say they're willing to negotiate with candidates for higher pay. also, incredibly significant on this whole question of where is the income growth. here to talk about it, matt ferguson of careerbuilder.com, the man who did the survey. matt, you look at those and say, wow, 60% are will to go negotiate for higher pay, some are willi in ing to hire. seems good. how does this compare to the survey a few months ago. give us some context how we should be reading it. >> i think some of it is similar, the number of people willing to hire, 53%, has gone up so i think that's an
10:54 am
improvement. the people negotiating for salary, i think that's been consistent and skilled labor brings a premium, and i think you saw that in the survey. >> and so when you say hiring, i guess it's hard for you to forecast i guess how long until we're quote, unquote, break even. but where do you see the hiring? is it mostly government, or is it in areas we really have not been seeing it? >> well,is been in government. it's been in education. it's been in health care. you have seen some in utilities recently. those have been the main areas. functional areas of companies, customer service, technology, sales, business development, human resources. and it's not surprising, you see customer service technology and sales. customer service helps you retain revenue. technology can help cut costs and also bring in new products for revenue and sales brings in revenue. so i think when you hear employers say they want those three areas coming back out of the downturn, that it's not surprising. >> all right. are there any particular parts of this economy that you think are going to be growing, or
10:55 am
where you would say to your children or to people who want really good advice, here is the direction you need to go? >> you mean someone coming out of school, beginning a career? >> sure. >> absolutely. >> or, you know, a lot of people looking for new careers now. >> yeah, look. anything you can do to get skills and training in technology, they're going to be adding jobs and technology for a long period of time. this survey supports that. health care. i don't think it matters really what happens with health care reform. there will still be more jobs in health care next year and the year after that, regardless of what happens in the fall for health care reform. both those are areas that i would say you can focus on. i think energy, the new energy sector is areas for people to find jobs. there is probably not a lot there now, but will be over the next few years, and i think those areas stand out for places for people to look at. >> the thing that stuck out for me, and i'm sure it did for you, as well, six of ten employers are willing to negotiates with candidates for higher
10:56 am
compensation. what do you suppose is driving that? >> with him, part of this is just the way the mark economy works. the labor department came out last week with a survey saying we created 6.7 million jobs in the fourth quarter. the problem is, we lost 8.5 million. and so when those numbers come out for the second quarter when this survey was taken, i think you'll see a similar result. what that shows me is, there's still dynamic areas of the economy, and in those areas, people are willing to negotiate still hard-to-find talent. we're losing a lot of jobs also. and so that's what the survey shows me, that some areas, it's still hard to find good people, and there's a premium placed on findings. >> all right, matt ferguson, thank you very much for your time, sir. >> all right. thank you. up next, a handful of stocks making big moves, including anatawok and kinco. >> i can't believe manitwa is getting the boot. booted off the s&p.
10:57 am
>> really? well, more on that. don't go away. some people buy a car based on the deal they get. others by the car of their dreams. during the lexus golden opportunity sales event, you can do both. special lease offers now available on the 2009 is 250. speto its employeers storbenefits package at no direct cost to the company... it was a perfect fit. find out more at aflac!... ...forbusiness.com
10:58 am
was it really for fun, or to save money on heat? why? don't you think nordic tuesday is fun? oh no, it's fun... you know, if you are trying to cut costs, fedex can help. we've got express options, fast ground and freight service-- you can save money and keep the heat on. great idea. that is a great idea. well, if nordic tuesday wasn't so much fun. (announcer) we understand. you need to save money. fedex
10:59 am
♪ yes, you're lovely... ♪ what do you think? hey, why don't we use our points from chase sapphire and take a break? we can't. sure, we can. the points don't expire... ♪ there is nothing for me... ♪ there's no travel restrictions... we could leave tomorrow. we can't use them for a vacation. you can use the points for just about anything. i know... ♪ the way you look tonight ♪ chase what matters. get your new chase sapphire card at chase.com/sapphire.
left
right

124 Views

disc Borrow a DVD of this show
info Stream Only

Uploaded by TV Archive on